A Free Lunch . . . with Processed Food

A pioneering pack of very clever and ambitious traders—aided by some mathematical wizardry—figured out how to bundle risky investments into packages that carried triple-A ratings. This incredibly lucrative new market in collateralized debt obligations (CDOs), which was propped up by the ratings agencies, swept across Europe, as cautious banks sought new ways to diversify without taking on too much risk.

The Too-Perfect Investment

Like the grain of sand lodged in an oyster’s shell, an irritant sometimes drives what is—and should always be—an introspective, conservative company to outsize ambitions. This is what happened to Landesbank (LB) Kiel, along with its regional sibling, Hamburgische Landesbank, ...

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